Letting Employees Run the Company

Leigh Buchanan is an editor-at-large for Inc. magazine. A former editor at Harvard Business Review and founding editor of Webmaster Magazine, she writes regular columns on leadership and workplace culture.

Thomas Walter had the same reaction as many leaders have had upon encountering Jim Collins's seminal Good to Great for the first time. First came the surge of enthusiasm. Then the question: How can my business be more like these?

In 2005, Walter, who is CEO of Tasty Catering, a $5.3 million company in Elk Grove Village, Illinois, bought copies of Collins's book for the whole staff, about 50 employees. Everyone completed the work sheets for identifying core values, hedgehog concepts (the activity that, if done steadily and well, will produce success), and big hairy audacious goals. Collins, famously, also talks about getting the right people on the bus. The Tasty Catering bus was already filled with the right people; many employees had worked at the company since high school. Walter decided it was time to let his workers drive.

Tasty Catering formed two Good to Great councils, which make all strategic decisions for the company. Each council has eight charter members drawn from across the company—culinary workers, clerical staff, drivers. One council conducts business in English, the other in Spanish, which is the first language for about a third of the work force. At least one of the three owners—Walter and his two brothers—sits in with each group. The councils hold meetings a few days apart, and an outside translator produces copies of the combined minutes in both languages. Each month, two random employees are chosen to join the councils for the month. "It puts us all on an even playing field," says Anna Wollin, an account executive who joined one of the councils when they were formed. "I had been with the company less than a year, and my opinion was as important as an owner's opinion."

Virtually every major companywide initiative for the past five years was born in the Good to Great councils, whose members frequently reference Collins's ideas. The councils redrew the organizational chart from a traditional departmental structure to a collection of five- or six-person teams arranged in a circle around the customer. During one meeting, the owners asked council members how much health care coverage the company should provide. Because the majority of staff receives health insurance through spouses, the councils opted to cover a smaller portion of insurance premiums and apply the savings to health-club memberships, which would benefit a larger number of employees.

Last year, when the recession pummeled the catering industry, Walter charged the councils with preparing a disaster plan. "They said, 'We think the first thing is the owners should take a 30 percent pay cut,' " says Walter. "I thought, That's a good idea. Leaders go first, right?" The councils also created an employee assistance program to help workers in serious financial straits and The Club, an in-house store at which employees can buy food and other staples used in the business at cost plus 5 percent for handling and taxes.

Day-to-day leadership decisions remain the province of the owners. The councils have no say on promotions or capital expenditures—whether the company should purchase a new truck, for example. The councils did, however, weigh in on a recent decision to acquire a competitive business.

The councils read and discuss a variety of other management books, but they keep coming back to Jim Collins. "Good to Great is like the U.S. Constitution for us," says Walter. "It's so interesting to see chefs and drivers talking about these issues. The charter members are wonderful people—ethical and smart, natural leaders. And when they get together, the ideas flow like water."